Question 1

The rationale for ability-to-pay taxation and the contention that those with large incomes should pay more taxes both absolutely and relatively is that

Accepted Answer

A) high-income receivers are generally in a better position to shift taxes than are low-income receivers. 
B) the transfer system is regressive and it is therefore essential to have an offsetting progressive tax structure. 
C) rational consumers spend their first dollars of income on the most urgently desired goods and successive dollars on less essential goods. 
D) taxes should be paid for financing public goods in direct proportion to the satisfaction an individual derives from those goods. 
A) high-income receivers are generally in a better position to shift taxes than are low-income receivers. 
B) the transfer system is regressive and it is therefore essential to have an offsetting progressive tax structure. 
C) rational consumers spend their first dollars of income on the most urgently desired goods and successive dollars on less essential goods. 
D) taxes should be paid for financing public goods in direct proportion to the satisfaction an individual derives from those goods.

Question 2

The three most important sources of federal tax revenue in order of descending importance are

Accepted Answer

A) sales, payroll, and personal income taxes. 
B) personal income, corporate income, and sales taxes. 
C) personal income, corporate income, and payroll taxes. 
D) personal income, payroll, and corporate income taxes. 
A) sales, payroll, and personal income taxes. 
B) personal income, corporate income, and sales taxes. 
C) personal income, corporate income, and payroll taxes. 
D) personal income, payroll, and corporate income taxes.

Question 3

Assume you pay a tax of $10,000 on a taxable income of $50,000. If your taxable income were $150,000, your tax payment would be $25,000. This suggests that the tax is

Accepted Answer

A) proportional. 
B) regressive. 
C) progressive. 
D) discriminatory. 
A) proportional. 
B) regressive. 
C) progressive. 
D) discriminatory.

Question 4

Which of the following is correct about the U.S. tax system?

Accepted Answer

A) The primary federal tax system is regressive, while the primary state and local tax systems are progressive. 
B) Both the primary federal tax system and the primary state and local tax systems are regressive. 
C) The primary federal tax system is progressive, while the primary state and local tax systems are regressive. 
D) Both the primary federal tax system and the primary state and local tax systems are progressive. 
A) The primary federal tax system is regressive, while the primary state and local tax systems are progressive. 
B) Both the primary federal tax system and the primary state and local tax systems are regressive. 
C) The primary federal tax system is progressive, while the primary state and local tax systems are regressive. 
D) Both the primary federal tax system and the primary state and local tax systems are progressive.

Question 5

Describe the size of government employment as a percentage of the labor force. What is the major type of government employment at the state and local levels and at the federal level?

Accepted Answer

In 2016, U.S. governments (local, state,

Question 6

Refer to the income tax schedule given in the table. If your taxable income increases from $4,000 to $5,000, you will encounter a marginal tax rate of

Accepted Answer

A) 10 percent. 
B) 15 percent. 
C) 25 percent. 
D) 40 percent. 
A) 10 percent. 
B) 15 percent. 
C) 25 percent. 
D) 40 percent.

Question 7

The U.S. federal expenditures for "pensions and income security" are dominated by

Accepted Answer

A) housing subsidies. 
B) unemployment benefits. 
C) food stamps. 
D) Social Security payments. 
A) housing subsidies. 
B) unemployment benefits. 
C) food stamps. 
D) Social Security payments.

Question 8

Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 25 percent and his boss offers him a raise of $2,000 per year. Indy should

Accepted Answer

A) accept the raise because his after-tax income will rise by $1,500. 
B) reject the raise because his after-tax income will fall by $3,000. 
C) reject the raise because his after-tax income will fall by $4,500. 
D) reject the raise because his after-tax income will fall by $6,000. 
A) accept the raise because his after-tax income will rise by $1,500. 
B) reject the raise because his after-tax income will fall by $3,000. 
C) reject the raise because his after-tax income will fall by $4,500. 
D) reject the raise because his after-tax income will fall by $6,000.

Question 9

In the graph,S₀ = supply curve for bourbon (seller's supply)D = demand curve for bourbonSₜ = supply for bourbon plus excise tax on bourbon (effective supply as seen by buyers)tax = an excise tax on bourbon (of $20 per case)The excise tax on bourbon as described in the diagram is ultimately paid

Accepted Answer

A) by buyers only. 
B) by sellers only. 
C) 40 percent by buyers and 60 percent by sellers. 
D) 60 percent by buyers and 40 percent by sellers. 
A) by buyers only. 
B) by sellers only. 
C) 40 percent by buyers and 60 percent by sellers. 
D) 60 percent by buyers and 40 percent by sellers.

Question 10

In which of the given market situations will the largest portion of an excise tax of a specified amount per unit of output be borne by producers?

Accepted Answer

A) 4 
B) 3 
C) 1 
D) 2 
A) 4 
B) 3 
C) 1 
D) 2

Question 11

Which of the lines in the diagram represent(s)a proportional tax?

Accepted Answer

A) both A and B 
B) D only 
C) C only 
D) B only 
A) both A and B 
B) D only 
C) C only 
D) B only

Question 12

The major sources of funds for the U.S. federal government include the following, except

Accepted Answer

A) payroll taxes. 
B) proprietary income. 
C) borrowing. 
D) general sales taxes. 
A) payroll taxes. 
B) proprietary income. 
C) borrowing. 
D) general sales taxes.

Question 13

Explain the probable incidence of a general sales tax imposed by a state.

Accepted Answer

A sales tax is a general excise tax levi

Question 14

The average tax rate is

Accepted Answer

A) equal to the marginal tax rate if the tax is progressive. 
B) the total tax rate minus the marginal tax rate. 
C) the ratio of total taxes paid to total taxable income. 
D) the tax rate that applies to incremental dollars of income. 
A) equal to the marginal tax rate if the tax is progressive. 
B) the total tax rate minus the marginal tax rate. 
C) the ratio of total taxes paid to total taxable income. 
D) the tax rate that applies to incremental dollars of income.

Question 15

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

Accepted Answer

A) True 
 B)False

Question 16

The graph illustrates the market for a product on which an excise tax has been imposed by government. What is the area that represents the efficiency loss due to the tax?

Accepted Answer

A) XYT 
B) XYZ 
C) WXZU 
D) WXYZU 
A) XYT 
B) XYZ 
C) WXZU 
D) WXYZU

Question 17

If your income increases from $10,000 per year to $14,000 per year and your tax payment increases from $2,000 to $2,840, the marginal tax rate

Accepted Answer

A) is 20 percent. 
B) is 21 percent. 
C) is 25 percent. 
D) cannot be determined from the given data. 
A) is 20 percent. 
B) is 21 percent. 
C) is 25 percent. 
D) cannot be determined from the given data.

Question 18

A progressive tax takes relatively more from the rich than it does from the poor.

Accepted Answer

A) True 
 B)False

Question 19

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Accepted Answer

A) True 
 B)False

Question 20

Give the most important source of revenue for local governments and their most important expenditure.

Accepted Answer

Local governments obtain about 72 percen

Exam 20: Public Finance: Expenditures and Taxes

The rationale for ability-to-pay taxation and the contention that those with large incomes should pay more taxes both absolutely and relatively is that

The three most important sources of federal tax revenue in order of descending importance are

Assume you pay a tax of $10,000 on a taxable income of $50,000. If your taxable income were $150,000, your tax payment would be $25,000. This suggests that the tax is

Which of the following is correct about the U.S. tax system?

Describe the size of government employment as a percentage of the labor force. What is the major type of government employment at the state and local levels and at the federal level?

Refer to the income tax schedule given in the table. If your taxable income increases from $4,000 to $5,000, you will encounter a marginal tax rate of

The U.S. federal expenditures for "pensions and income security" are dominated by

Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 25 percent and his boss offers him a raise of $2,000 per year. Indy should

In the graph,S₀ = supply curve for bourbon (seller's supply)D = demand curve for bourbonSₜ = supply for bourbon plus excise tax on bourbon (effective supply as seen by buyers)tax = an excise tax on bourbon (of $20 per case)The excise tax on bourbon as described in the diagram is ultimately paid

In which of the given market situations will the largest portion of an excise tax of a specified amount per unit of output be borne by producers?

Which of the lines in the diagram represent(s)a proportional tax?

The major sources of funds for the U.S. federal government include the following, except

Explain the probable incidence of a general sales tax imposed by a state.

The average tax rate is

The greater the elasticity of demand and supply, the greater is the efficiency loss of a tax.

The graph illustrates the market for a product on which an excise tax has been imposed by government. What is the area that represents the efficiency loss due to the tax?

If your income increases from $10,000 per year to $14,000 per year and your tax payment increases from $2,000 to $2,840, the marginal tax rate

A progressive tax takes relatively more from the rich than it does from the poor.

The Social Security tax is regressive because it applies only on income below a "cap" income level.

Give the most important source of revenue for local governments and their most important expenditure.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters